The Austrian Theory of Value and Capital: Studies in the Life and Work of Eugen von Böhm-Bawerk

Volume 1, No. 2 (Summer 1998)

As substantial as economist as Schumpeter could claim that interest is a disequilibrium phenomenon and fantasize about a long-run equilibrium where market forces have pushed the interest rate to zero. John Maynard Keynes imagined interest to be a purely monetary phenomenon. Creating what Hayek called a "mythology of capital," Frank Knight held that production and consumption occur simultaneously, that the period of production is irrelevant, and that the interest rate is wholly determined by technological considerations. F.A. Hayek found it necessary to repeat with Knight the debate that had earlier taken place between Böhm-Bawerk—and give timeless value to the critical assessment of the Austrian theory offered by Klaus Hennings.